ASIC has published the regulatory guidance to assist in the application of the new best interests duty (BID) for mortgage brokers, which comes into effect in 2021.
Consistent with the legislation, the guidance is high level and principles-based, but also incorporates practical examples. The guidance is intended to explain the obligations introduced by the government, but does not prescribe minimum standards of conduct nor does it impose new or additional obligations.
The guidance contains ASIC’s views on how mortgage brokers may comply with their best interests obligations at key stages of the credit assistance process. It provides guidance on:
- the effect of the range of credit providers and products brokers can access
- recommending packages of credit products
- the types of records that may be kept to demonstrate compliance
"These are important and timely reforms for the mortgage broking industry and for customers shopping for a loan," said ASIC Commissioner Sean Hughes.
"This reform was legislated by the Parliament to improve the quality of credit assistance provided to consumers. ASIC supports that objective
"Consumers rightly expect mortgage brokers to act in their best interests and ASIC’s guidance describes how we expect them to do so. Under these new obligations, let there be no doubt – the consumer must always come first."
According to Hughes, ASIC released the regulatory guide "as early as effectively possible" to help industry prepare on a timely basis.
From 1 January 2021, ASIC will closely monitor conduct and outcomes to ensure mortgage brokers are complying effectively with the best interests duty.
More to come